The top 10 companies for Sustainability Reporting, according to MarketMeter

Livewire is proud to partner with MarketMeter, gaining exclusive access to research that evaluates major ASX companies across a range of factors.
Chris Conway

Livewire Markets

Like it or not, the age of big data is upon us. I, for one, am a fan. Whether it be mapping the human genome, accurately predicting cardiac arrests, or simply getting me to work more efficiently, big data has inexorably improved our lives.

Big data is also important in financial markets. The challenge, of course, comes in collecting the data. It needs to be high quality, it needs to be relevant, and it needs to be trustworthy. That’s why Livewire Markets is proud to partner with MarketMeter, for exclusive access to their analytics.

What is MarketMeter?

MarketMeter is an interactive market insights platform that measures and benchmarks institutional investor perceptions of Australian listed companies, who find it is a reliable risk management tool to understand their performance in the eyes of institutional investors.

Put simply, MarketMeter conducts research twice a year to measure the perception of listed companies in the eyes of fund managers. The fund managers score companies from 1-10 on a range of factors and are then able to see how their views compare to those of other professional investors. 

Approximately 90,000 data points from 130 institutions were captured on MarketMeter’s platform in the second half of 2022. The quality and depth of the data pool are underpinned by MarketMeter’s partnerships with Australia’s leading super funds and their relationship with the Australasian Investor Relations Association (AIRA) as a data provider.

“With the benefit of super fund data partnerships, MarketMeter has a deep, high-quality data pool which can help fund managers understand how their stock perceptions differ from their peers, category by category, and by how much”, says Nicholas Coles, Managing Director and co-founder at MarketMeter. 

Exclusive access to MarketMeter data

Over the coming week, the Livewire content team will shine a light on the latest MarketMeter data. MarketMeter collects data on 27 factors and we have selected six of those factors that we think Livewire readers will be interested to learn more about.

We kick off today covering the factor 'Sustainability Reporting', which falls under the ESG category group. The other factors we will be covering are as follows:

Investment Desirability

Focuses on the perceived value of a company’s stock with respect to earnings potential, earnings quality, integrity and quality of management amongst other criteria specific to the investment selection process of individual institutional investors.

Growth Prospects

Looks at potential for the company in question to not only grow its earnings per share and share price, but also in a broader sense to increase market share and generally improve its market position.

Earnings Quality 

This takes into consideration earnings per share measured primarily against other ASX Top 100 companies, the market in general, but also against the company in question’s own earnings’ history. This includes consideration of revenue diversification streams, ability to withstand external shocks, as well as consistency in reporting.

Effectiveness of CEO
Appraises the key areas of a CEO’s performance; primarily earnings quality, growth prospects, clarity and strength of strategy, and shareholder value focus. Succession planning and credibility are also key issues when evaluating a CEO. Consideration is also given to the appropriateness of the structure of the CEO’s remuneration package and performance hurdles, and whether it’s aligned with long-term growth objectives.
Sustainable Competitive Advantage

Relates to a company’s market positioning, for example, its strength of bargaining power with suppliers, quality and market share of product/service provided to its respective market.

Sustainability Reporting

ESG investing is all the rage at the moment and, like it or loathe it, it is here to stay. However, one of the major problems with ESG is that there are few universally accepted standards. Unlike the International Accounting Standards (IAS), which have been adopted by financial markets worldwide, there is no equivalent (yet) for ESG. Other problems with ESG are that current data relies on self-reporting (due to the lack of accepted convention), and there is currently an outsized focus on the 'E' (environment), in ESG. To overcome these challenges, it's worth understanding which companies fund managers believe are the best at reporting ESG disclosures, which is exactly what 'Sustainability Reporting endeavours to measure. 

As per the MarketMeter definition, Sustainability Reporting equates to "Transparency and completeness of reporting ESG disclosures including Task Force on Climate-Related Financial Disclosures (TCFD), Sustainability reports and other ESG related disclosures."

So, which companies do the best fund managers in Australia rank at the top of their game regarding sustainability reporting? 

Top 10 ASX 100 Companies for Sustainability Reporting

These are the ASX 100 companies that fund managers scored highest with regard to Sustainability Reporting. The list appears in order based on the results of the most recent MarketMeter research.

  1. Brambles (ASX: BXB)
  2. Cleanaway Waste Management (ASX: CWY
  3. Ramsay Health Care (ASX: RHC
  4. Macquarie Group (ASX: MQG
  5. REA Group (ASX: REA
  6. Mirvac Group (ASX: MGR
  7. GPT Group (ASX: GPT
  8. IDP Education (ASX: IEL
  9. Telstra (ASX: TLS)
  10. Xero (ASX: XRO

Top 10 ASX 101-200 Companies for Sustainability Reporting

These are the ASX 101-200 companies that fund managers scored highest with regard to Sustainability Reporting. The list appears in order based on the results of the most recent MarketMeter research.

  1. Graincorp (ASX: GNC) 
  2. Spark NZ (ASX: SPK)
  3. SIMS (ASX: SGM)
  4. Invocare (ASX: IVC) 
  5. Iress (ASX: IRE) 
  6. Domain Holdings (ASX: DHG)
  7. Chorus (ASX: CNU)
  8. Nanosonics (ASX: NAN) 
  9. Seven Group Holdings (ASX: SVW) 
  10. AUB Group (ASX: AUB) 

Macri's Take

To provide some colour on the lists above, I reached out to David Macri, CIO at Australian Ethical - a man who knows a thing or two about ESG. 

LW: What did you think of the list generally?

Macri: I think the list of stocks is interesting in that I would’ve expected to see some of the large Banks and Diversified Miners in the top 10 because they have large budgets allocated to producing these reports. 

Also, the fact that Macquarie is in fourth is a testament to their ongoing attempts to position the business to benefit from the energy transition in the coming years.

LW: Which companies do you think should have made the list?

Macri: I think Westpac, NAB and Dexus do a good job in their reporting.

LW: How important is "sustainability reporting " to your overall investment process?

Macri: The reports are a good source of information and help us to make a more informed decision with respect to certain issues, which may, in turn, impact whether a company meets ethical or sustainable frameworks and are, therefore, investable or not. They are valuable for us and other investment managers, I’m sure, as a reference. And the more focus corporates give it and the better quality they become, the more the laggards are forced to ‘lift their game’, which is ultimately a good thing for investors generally, because it provides more transparency which leads to better decision making.

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Chris Conway
Managing Editor
Livewire Markets

My passion is equity research, portfolio construction, and investment education. There are some powerful processes that can help all investors identify great opportunities and outperform the market, and I want to bring them to life and share them...

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